- Define price sensitivity. Provide relevant examples.
- What can you say about the price sensitivity of priceline’s customers?
- What eddect would priceline’s price be likely to have on the reference price cutomers bear in mind for travel and mortgage services?
- How does the company’s lowest-cost loan guarantee affect a customer’s perception of the product’s value?
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WHAT IS PRICE SENSITIVITY
Price sensitivity is directly related to the elasticity of demand for the product. The higher the elasticity of demand for a product at a particular price the higher the price sensitiviy.
· Price sensitivity can be calculated for every new product concept screened
· First year sales can be estimated for every product concept and over a range of prices
· Price/volume can be individually optimized for every product concept tested
· New product concepts can be screened and/or completely rank ordered on consumer appeal, market share, unit volume, gross dollar volume or gross profits
· All calculations can be done for any subset of the sample as well as the total sample
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